New traders and even some highly experienced traders completely
underestimate the need to take charge of their psychology in order to
succeed in trading. Most people who get into trading want to make money
and may have no interest in personal development and may even scoff at such
In NLP (Neuro Linguistic Programming) there is a technique called
re-framing. The idea is that by re-framing a situation the patient changes
their viewpoint and they automatically change their response. Let me
re-frame trading psychology to see if I can help change your perspective to
appreciate how essential trading psychology is to trading your system
Imagine the trading system that you have chosen is a car, your destination
is financial freedom. You need to drive that car in order to reach your
destination, however in order to do that you need to learn to drive!
If you didn’t learn to drive that car (however fantastic the car itself
was) you would very likely crash, this is why in the real world we take
driving lessons and need to pass a practical and theory test in order to be
allowed to drive.
OK so if the trading system is the car and the destination is financial
freedom, then doesn’t it make sense that you need to learn how to drive
that car. Well adopting the correct trading psychology is the equivalent
of learning to drive, however this is not spelled out in most trading
There seems to be an underlying assumption that buying the system and
learning the mechanics of operating the system automatically enables you to
trade the system, this is as ridiculous as saying that buying the car and
learning the mechanics of operating the car automatically enables you to
drive the car.
The great thing about adopting the correct trading psychology just as with
driving is that it is transferable to different trading strategies, once
you have the correct mindset, you could trade any system that suits your
personality just as you could drive any car.